Citi upgrades Ford to Buy on improving F-Series momentum, lifts PT to $20

Investing.com -- Citi upgraded Ford Motor to Buy from Neutral and raised its price target to $20 from $19, saying improving F-Series pickup production, easing warranty costs and better aluminum supply are driving a positive shift in the automaker's earnings outlook.

The brokerage said Ford's shares have been out of favour, with only three Buy ratings among the 18 analysts covering the stock, compared with 15 Buy ratings for General Motors among 22 firms. Citi believes that momentum is now turning as production normalises and profitability improves.

Ford reported second-quarter 2026 adjusted earnings per share of $0.42, beating Citi's estimate of $0.34 and the FactSet consensus of $0.36. The automaker also raised the midpoint of its full-year guidance by $1 billion, reflecting stronger first-half results, improved pricing and a more favourable product mix. Citi lifted its 2026 EPS forecast to $1.90 from $1.75, while increasing its 2027 and 2028 estimates to $2.10 and $2.30, respectively.

The brokerage expects second-half F-Series production to rise about 28%, supported by the resolution of last year's aluminum supplier disruption, with additional gains anticipated in 2027 and 2028 as Ford expands Super Duty truck capacity. It also expects warranty accruals to decline by $1.5 billion this year after first-half accruals fell by roughly $1 billion year over year.

Citi also highlighted Ford's growing non-automotive revenue opportunities, noting subscription services increased 20% annually to 1.6 million in the second quarter. The brokerage said these higher-margin software offerings, alongside future energy-related businesses, could provide incremental earnings support over time.

On valuation, Citi said Ford historically traded at an average of 4.2x EV/EBITDA, 7.0x P/E, and 8.0x EV/free cash flow between 2015 and 2019. The new $20 target price applies the upper end of those valuation ranges to its higher 2027-2028 earnings estimates.

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